Making The Most Of M&A In 2025

Editor’s note: Veena Lakkundi will be a featured speaker at our upcoming Manufacturing M&A Dealmakers Forum in Chicago this September 9 & 10, sharing her strategies for mastering the art of the deal. Please join us >

Optimism generally remains high for the manufacturing M&A market in the next 12-18 months, despite headwinds that include an economic slowdown. But Veena Lakkundi has some ideas about how CEOs should navigate the near-term future to make sure their companies slice through the obstacles when it comes to acquiring companies or operations to bolster the years ahead.

And she’s worth heeding: Lakkundi has been senior vice president of strategy and corporate development for a giant of the U.S. manufacturing world, Rockwell Automation, for nearly three years, and her current stint follows 14 years working her way up through the leadership hierarchy of 3M, a major American manufacturer of a different sort.

“It’s always about value creation,” Lakkundi tells Chief Executive. “You have to be an active portfolio manager all the time. Regardless of what’s happening outside, that has to be your mindset, and it’s got to be driven by the willingness of the CEO. You have to understand what will create value.”

Here’s some advice from Lakkundi for manufacturing CEOs about optimizing their decisions for creating value through M&A activity:

Focus on the customer. “You should be driven by finding more ways to serve customers, or more refined ways,” Lakkundi says. “Transform your portfolio to be more relevant to customers and create value for them.

“For example, you really need a clear understanding of what your company should be the natural ‘owner’ of. If there is very little synergy [in a potential acquisition] with what you do today, and you’re not the natural owner of it, you’re going to destroy value, not create it. It might look good initially, but if there’s no path to create value at the end of thigns for shareholders and customers, don’t do it.”

Make small bets. “Now is the time to be focused, not the time to be placing huge bets,” Lakkundi says. “That’s where the diligence comes in, to be active portfolio managers. This isn’t the time to place big bets, especially on something where you don’t have a full understanding of how you’re going to drive synergies. It should be about growth, not necessarily just about cost synergies.

“You can end up paying lower multiples than a couple of years ago, but you will still have to figure out how to create value out of that [acquisition]. Because you may have to borrow to do it. So you have to be very thoughtful about choices in terms of what’s going to help create value.”

Establish readiness. This starts with deciding what must be in place to ensure it’s worth it to consummate a potential deal.“Make sure you have thresholds in place” that govern whether a CEO pushes the button on an acquisition—or not. “CEOs need to make sure they don’t just fall in love with a deal. And sometimes boards tend to do that as well. Make sure you know what your walkaway is and that you’ve got a rigorous process in place to think through, by stages, what you should do.

And “pre-empt” the deal by ensuring it’s something your company actually should do and that you can carry out the transaction—and beyond—successfully. “Through partners, private-equity relationships and others, get to know the company you’re interested in,” Lakkundi advises. “Are you staffed to do that? Put some thought into it. Because once you get into the [acquisition] process, you can get carried away. The deal can be a freight train that ends up carrying you to limited return on your investment. You have to know at what point you might walk away.”